Dismal UK real estate market encourages Britons to look abroad

Friday 19.09.2008 (23 months ago)
United Kingdom :: Business & Economy News

The dire state of the United Kingdom’s housing and real estate market is looking darker by the day. Even the Bank of England’s top economist, Spencer Dale, has sounded the alarms by calling market conditions "painful," especially as investors and British families cope with the rapidly decreasing values of their properties. Recent predictions published by major financial institutions and industry specialists indicate that house values in Britain will likely decline by a staggering 20 percent by late 2009.

This situation is turning into a major headache for both home owners—who must now struggle with a heavy mortgage burden based upon inflated and unrealistic property values—and landlords of buy-to-let properties who face the daunting decision of deciding whether it is worth selling their real estate now, before home values plunge even further next year. Already, would-be homeowners who would have been able to take up mortgages for as much as 95 percent of a home’s value only two years ago are now finding that lenders are far stricter and are therefore effectively locked out of the UK housing market.

An increasing number of Britons, however, are finding that the emerging markets of East/Central Europe can serve as a panacea for most of their woes. Former Eastern bloc countries that joined the European Union in May 2004—such as Poland, Hungary and Slovakia—are all politically stable, western-style democracies and best of all, their economies are generally doing better than those of western nations. Slovakia has turned into an especially bright success story, thanks in large part to the country’s powerful auto industry. Bratislava is a booming city with the most vibrant real estate market anywhere in Europe. The Slovak capital has already attracted a great deal of foreign investment. Best of all, it is still possible to purchase property in Slovakia in Koruna, rather than Euros, until January 2009, and this opens up the door to an advantageous exchange rate for Britons who have their savings in Sterling. Moreover, it is now often easier to receive loans and mortgages from Central European banks than those in Britain, as they are nowhere nearly as burdened by the credit crunch.

© Prime Asset Investments Ltd.